Verizon cracks down on premium text message scams

March 10, 2011 By Aemon Malone

Verizon is offering refunds to anyone who fell victim to what it alleges are fraudulent premium text message campaigns.

Verizon has announced that it has filed a lawsuit against a group of six individuals and 20 companies, who it alleges tricked people into signing up for a fraudulent premium text messaging service.

The suit names Jason Hope and Wayne P. DeStefano among others and their associated companies, including Cylon, Jawa and EyeLevel Holdings. Verizon is seeking an immediate injunction to stop the companies’ activities as well as monetary compensation.

“Among the things the company discovered and that are explained in detail in the lawsuit include the fact that the defendants defrauded Verizon Wireless by misappropriating approved short codes for unapproved ‘shadow’ campaigns that did not comply with Verizon Wireless’ consumer protection and disclosure policies,” Verizon stated in a press release.

Short codes are the industry standard phone numbers that wireless customers can text to sign up for premium services.

Verizon alleges that the scammers gained access to the company’s short codes by setting up legitimate sites, but then used the codes to run illegitimate “shadow campaigns.” Customers who signed up for the premium text services — which promised anything from movie showtimes to video game tips — were not told how much they would be charged. In fact, the premium services added anywhere from $3 to $10 to a customer’s monthly bill.

Traditionally, when customers sign up for a premium text service, Verizon keeps a portion of the monthly fee and passes the remainder on to the third-party company. In this instance, because the accused companies were operating using approved short codes, Verizon wasn’t immediately aware of the fraud.

The suit also alleges that the offending websites were setup to detect the IP addresses of Verizon auditors and re-direct them to innocuous websites, making it even more difficult for the company to tell legitimate websites from the fraudulent. Verizon hasn’t disclosed the exact number of people who were affected by the ploy, but did say the number is “sizeable.”

Verizon has set up a website to reimburse any of its customers who fell victim to the alleged scam.

Showing 4 comments

Vixay Sysouthavongsa at 7:28am 11th March 2011 FYI $15 a month data plan for 150mb on Verizon. I hate Verizon as well but everyone is a business and need to make money. But I understand your fustrations. I use to work there and hated it.
Joe Blown at 12:23pm 10th March 2011 Everyone should just BOYCOTT VERIZON FOR LIES, PRICE INCREASES, and IT'S ALL ABOUT PROFIT TREATMENT OF CONSUMERS. 1. Verizon PROMISED and stated by their CEO that smart phones would not go over $199.00 on a 2 year upgrade. New phones now up to $299.00. A VERIZON LIE!!! 2. Verizon told new customers when they signed up that they would get the new every 2 plan as long as they were customers. NOW VERIZON TAKES THAT AWAY, AND IN THEIR OWN WORDS, TO INCREASE PROFITS. Another Verizon Lie.
1. Joe Blown at 12:24pm 10th March 2011 3. Verizon only offers customers one unlimited data plan, even to those that use very little data. THIS MEANS VERIZON CUSTOMERS THAT USE LITTLE DATA *** PAY *** FOR HEAVY USERS. Verizon did this in an effort to draw AT&T customers to Verizon. BUT THEY ARE WILLING TO SCREW EXISTING VERIZON CUSTOMERS TO DO THIS. 4. Verizon has LIED TO ITS CUSTOMERS ON A REGULAR BASIS. Promises made and broken. CUSTOMERS SERVICE LEVELS HAVE STEADILY DROPPED OVER THE PAST 10 YEARS FOR THE SAKE OF INCREASING PROFITS. I have been a customer over 10 Years and watched more and more of their Customer Service taken away to increase PROFITS.
Chris Johnson at 6:44pm 10th March 2011 While I think it's great Verizon is doing that (and they should) you have to shake your head that people continue to fall for things like this.